About this inquiry

Past Public Hearings

31 Mar 2017: Canberra, ACT

1. Executive Summary

1.1

The 2015-16 Major Projects Report (MPR) is a consolidated review of 26 selected major defence acquisition projects1 (Major Projects) being managed by the Department of Defence (Defence). The total approved budget for this year’s MPR is approximately $62.7 billion, covering nearly 58 per cent of the budget within the Approved Major Capital Investment Program of $107.4 billion.2

1.2

The MPR reviews overall issues, risks, challenges and complexities affecting Major Projects and also reviews the status of each of the 26 selected Major Projects, in terms of cost, schedule and forecast capability.

1.3

The MPR comprises a series of Project Data Summary Sheets (PDSSs) for each of the 26 selected projects and an overarching analysis by the Australian National Audit Office (ANAO) and Defence.3 Defence’s Capability Acquisition and Sustainment Group (CASG) manages the acquisition and sustainment of equipment and supplies for Defence.

1.4

The Major Projects Report is developed by Defence in conjunction with the ANAO. The objective of the report is to improve the accountability and transparency of Defence acquisitions for the benefit of Parliament and other stakeholders. It is prepared in accordance with Guidelines approved by the Joint Committee of Public Accounts and Audit (JCPAA). The MPR is automatically referred to the JCPAA in accordance with its statutory obligation to examine all reports of the Auditor-General that are tabled in the Parliament. This report also examines ANAO Audit Report No. 11 (2016-17), Tiger – Army’s Armed Reconnaissance Helicopter.

1.5

A historic focus of the Committee when investigating the MPR and the PDSSs has been:

the transparency of the PDSSs

the business management of Defence

1.6

The focus on transparency of the PDSSs facilitates third parties to analyse and use the information contained in the MPR. In recent years discussions between the Committee, ANAO and Defence regarding possible improvements to the PDSSs have focused on: “Materiel Capability Delivery Performance” and “Project Maturity” indicators.

1.7

The focus on Defence’s business management goes to the core of the Committee’s work on effective public administration. Possible improvements in this area have focused on risk management approaches and the sometimes optimistic assessment of delivery of capability estimates.

1.8

As discussed in detail in Chapters 2 and 3, the Committee noted the following issues:

A qualified audit finding was made by the Auditor-General. The ANAO found the ARH Tiger Helicopters project PDSS ‘had not been prepared on the basis of the Guidelines’4

Material inconsistencies were identified in the forecast information in the LHD Landing Craft PDSS5

Complexities around the implementation of First Principles Review recommendations have resulted in longer implementation times than first anticipated

Systems to track inputs to capability remain inadequate, and more work should be done to address this issue

Project Maturity Scores continue to be an area of concern that should be addressed by both Defence and the ANAO

Comparisons to reporting regimes and methodologies of similar jurisdictions such as the United Kingdom may be of use to Defence

Inadequate/inappropriate project classification have led to greater schedule slippage than had initially been expected

Risk management tools used by some parts of Defence lack change and version control, putting the accuracy of risk assessment in jeopardy

Cost per flying hour has been calculated using different methodologies over the last year, and a single methodology should be considered to allow for clear comparisons

The ARH Tiger Helicopters project has been retained in the MPR to maintain transparency across the project’s lifecycle